The pandemic has shed light on businesses’ technology infrastructure shortcomings. No growth companies appear to be behind the technology curve, and their outdated systems are no longer cutting it. On the other hand, businesses that have kept pace with new technology are racing ahead, adding new systems to their technology stack and harnessing the added efficiency and power to generate higher growth and revenue.

While it is important to receive ROI from technology investments, now more than ever it is critical to understand the competitive edge that staying current with technology provides a company. The fundamental reason many companies are moving to new platforms and cloud-based solutions is the increased functionality these solutions provide.

What is Digital Transformation?

Digital transformation is how businesses use digital technologies to create new or modify existing business processes, practices, models, culture and customer experiences to meet changing business and market dynamics. Simply stated, it’s about identifying how you must adapt your business to drive customer loyalty and maintain a competitive edge in the digital age.

Webinar: What Every Finance Leader Should Know About Digital Transformation

Airdate: September 1, 2020
This on-demand webinar was presented by Kenneth Sims, vice president of business systems at LBMC Technology Solutions in conjunction with our partner, Bill.com. In this webinar, you’ll learn how finance leaders are embracing digital transformation to compete and provide long-term value to their organizations.

Why is Digital Transformation Important to me and my Business?

The most critical piece of a digital transformation is your people. Businesses should not implement technology just for the sake of implementing technology. It takes more than technology to bring solutions to our businesses. The human dimension really matters for digital transformation and is valued by your people when it frees them from a redundant and repetitive task and allows them to be more creative.

Technology in and of itself does not innovate; people do. Similarly, technology does not interrupt or disrupt; people do. It is important to remember that people are the most important asset, and technology enables and amplifies the potential that our people have. Employees can focus on higher value tasks and help your business be successful. Obviously, with all the things we have at our disposal for our employees, their contribution to the bottom line is influenced by what they know and with whom they are connected.

While the most common factor holding a business back from digital transformation is fear of change, change helps us transform how we do business. Disruptive change is all around us, and companies are having to adapt to the new normal and bring in skills, talents, processes, and technology they did not have prior to the pandemic. Delayed digital evolution has turned into digital transformation at a fast pace and has required businesses to pivot to enhanced user experiences focused on clients’ needs. Companies that had much of this in place were able to continue their businesses without much interruption in 2020 and even created additional opportunities, as they were seen as experts and helped their teams pivot to virtual business development and client experiences. To stay competitive and disrupt our own industry, we use technology to better our probability and ability to compete in the market.

4 Questions Every CFO Should Ask About Digital Transformation

1. Am I armed for leadership table discussions?

Of all the players who sit at the leadership table, only the CFO or the senior finance executive can speak to the company’s ability to handle the ongoing cost of doing business. In order to provide actionable insight, you need systems in place that arm you with accurate, real-time data. You require complete visibility over the organization’s working capital and receivables, including days sales outstanding, accounts receivable risks, the cost of the collections process, customers at risk, and much more. Do your current financial systems provide you with the clear and concise reports you need to be fully prepared?

2. Do my current technology projects enable maximum cost savings?

Many organizations have plans to implement or modernize their ERP system. If such a project is on your roadmap, it’s important to understand that modern ERPs will not solve all of an organization’s issues as it relates to process efficiency and optimization. The good news is that although ERP projects require a great deal of focus, it’s not so much that no other technology project can be considered. Review the projects you are committed to and ensure they are delivering everything that you need. If they’re not, consider other options.

3. Can I accommodate the changing needs and wants of my customer?

B2B customer expectations are changing. People expect to be able to pay for goods and services online, quickly and easily, both in their personal and professional lives. Common practices in the B2C world are quickly becoming requirements in the B2B world. Organizations need to allow for things like online payments, paying with credit cards, digital receipts/invoices and payment portals, to name a few. As the CFO, can you confidently state that your current receivables process satisfies today’s market demands? Is it agile enough to keep up with changes in the future?

4. Is my finance IT infrastructure safe and secure?

When a security breach happens, and a customer’s financial data is compromised, significant damage is done to both the customer relationship and the organization’s credibility in the market. It doesn’t matter if the security breach happens because of hardware failure, software access, or human error. Such an occurrence is devastating to an organization’s reputation and bottom line. When is the last time you reviewed your current systems and processes for security compliance? Are you confident that all employees and third-party suppliers meet and maintain your security and compliance standards?

If you answered ‘no’ to any of the above questions, you are leaving your organization at risk. From the loss of customers to bad decisions made based on inaccurate or incomplete data and even a potential security breach, one digital transformation project that can help address the above four issues is AR automation.

Accounts receivable automation solutions provide complete visibility into a company’s receivables. With clear and concise reports, including historical trend reports, finance leaders are able to forecast cash flow well into the future, providing the business with an accurate picture of what the organization is capable of long-term and what change is needed to succeed. By providing customers with a self-service payment portal, AR automation improves communication with the customer and gives them the option to interact with your organization when and how they want. The right AR automation platform will also help to ensure your customer and financial data are secure by being PCI DSS, SOC 1 and SOC 2 compliant.

5 Key Steps for Finance Leaders in their Finance Digital Transformation

1. Invest in the Right People

Change management is often the most difficult aspect of a major corporate initiative. In this instance, leadership and communication from senior finance leadership are essential to define and explain the changing mission. Ensuring team members are ready for transformation will require ongoing investment in their skills. Moreover, it’s essential to instill a continues improvement mindset, one where “we’ve always done it this way” is no longer an acceptable rationale.

2. Keep Technology Current

Technology is also an important ingredient in finance transformation. The right technology automation can remove unnecessary process complexity. Technology can save time – time the finance department team can use to accomplish more and provide greater value to the rest of the organization.

Artificial Intelligence (AI) using machine learning will become an increasingly important capability of financial management and ERP systems over the next decade. With AI, departments will be able to automate and streamline repetitive tasks that require limited judgment. This time savings will provide team members more time to focus on valuable work that requires judgment and experience.

3. Optimize Processes

Finance department work is often collaborative. So it’s important to instill a continuous improvement mindset and explore ways to improve coordination and hand-offs. Organizations must make a purposeful effort to refine processes whenever necessary.

4. Focus on Data Quality

Poor administration of data is a root cause of heavier-than-necessary staff workloads. As is the case in manufacturing, designing quality into the data management element of business processes pays dividends. Finance organizations that have significant data quality issues on average took almost three days longer to complete their close than those that have little or no problems. A lack of data quality control leads to the need for time-consuming reconciliation and checking for errors, or time spent and costs incurred dealing with the consequences of unchecked errors. Data quality is also an important reason to avoid using spreadsheets in enterprise accounting processes.

5. Demonstrate Value

Finance executives should select an initial project, one that provides strategic value and demonstrates the department’s commitment to be a business enabler. One option to consider is improving the budgeting process by making it easier for the budget owner. People in finance roles naturally think in terms of money, while people in line-of-business roles think in terms of “things” – headcount, units of materials purchased, or marketing leads required to close on sales. A dedicated budgeting application that allows budget owners to plan things and, with the help of software, translates things into money makes budgeting easier.

Technology advances have the potential to turn the longstanding objective to transform the finance department into reality, but only if finance executives address the people, process, and data issues that also prevent departments from enhancing their effectiveness. The right software, however, is the linchpin. It is the catalyst to giving departments the ability to devote more time to high-value work, enabling more flexible and agile operations while providing more strategic guidance to support more informed decision-making.

How do I Begin my Digital Transformation Journey?

The most critical step for a company when beginning its digital transformation is to impose discipline in the process. It is imperative to spend time evaluating where operational efficiencies exist and if business processes can be changed to eliminate them. Are there manually intensive, low value tasks that employees are spending time on that can be automated? Giving thought to the growth and scalability of the business will aid in ensuring the technologies that are invested in can continue to perform as the company grows. Documenting well-defined functional requirements and the outcomes you expect to receive overtime can provide the roadmap you need for your digital transformation. This information becomes the foundation by which you architect your technology infrastructure both from a hardware and software perspective and provides the metrics that allow you to measure your results. Getting the right employees involved in this process and communicating the objectives and expectations as you begin this journey will ensure a much higher degree of buy-in to change which is ultimately the key to success.

LBMC would love to help you start your journey, please fill out the form below if you are interested in speaking with one of our team members.